The Power of the Story

Investment stories have been around for as long as you have had financial markets and they show remarkable longevity. The same stories are recycled with each generation of investors and presented as new and different by their proponents. The stories that will be examined in the chapters to come have been laid out and categorized by the human emotion that makes each one so compelling;  some stories appeal to the fearful (risk averse), others the hopeful and still other to the greedy. The process that will be used in each chapter to examine each of the investment stories is also laid out, starting with the story, followed by the theoretical foundations and the evidence on its effectiveness (or lack thereof) and closing with its potential weaknesses (and ways of protecting yourself against them).